Washtenaw United: 'Stop the Debt Trap' petition drive targets cycle of poverty
WEMU has partnered with the United Way of Washtenaw County to explore the people, organizations, and institutions creating opportunity and equity in our area. And, as part of this ongoing series, you’ll also hear from the people benefiting and growing from the investments being made in the areas of our community where there are gaps in available services. It is a community voice. It is 'Washtenaw United.'
ABOUT JOSH HOVEY:
Josh Hovey is partner at Martin Waymire, a statewide strategic communications firm specializing in working with organizations that are seeking to make Michigan a better place.
He joined Martin Waymire after nearly 12 years at Lansing-based strategic communications firm Truscott Rossman, where he served as vice president. In that capacity, he managed communications strategy and client service for organizations ranging from small local non-profits to Fortune 500 corporations.
Josh is a nationally accredited communications professional who is adept in strategic planning, media relations, digital media and crisis communications. He is perhaps best known for his work serving as communications director for the successful 2018 campaign to legalize recreational marijuana in Michigan and then following up that campaign by launching the Michigan Cannabis Industry Association in 2019. From 2008 to 2018, he also managed communications for the Coalition Protecting Auto No-Fault’s effort to reform the state’s auto insurance system in a way that would protect catastrophically injured auto accident survivors.
From 2006 to 2008, he was an assistant to Lansing Mayor Virg Bernero where he managed constituent relations and developed environmental and economic policy initiatives for the administration.
Josh has earned his Accreditation in Public Relations, certifying his professionalism and ethics, and his mentorship for younger professionals in the field. In 2018, Josh was recognized with the PACE Maker of the Year award, the highest individual honor from the Public Relations Society of America Central Michigan Chapter.
In addition to his role at Martin Waymire, Josh also serves on several local boards including the city of Lansing Planning Commission, the Lansing Board of Zoning Appeal and the Lansing Regional Chamber Political Action Committee. When he is not volunteering with any of those organizations or at his desk at Martin Waymire, you can usually find him cycling the back roads of Michigan, playing soccer or going to concerts with his wife.
A 2005 graduate of Michigan State University, Josh holds a bachelor’s degree in sociology, which he finds extremely helpful in understanding how to help clients connect with their target audiences.
David Fair: This is 89 one WEMU, and welcome to another edition of Washtenaw United. I'm David Fair, and I'm sure many of you have noticed interest rates have been going up. The average interest rate for a 30-year fixed mortgage in Michigan is up to six point seventy five percent. Now, all too many in our community live paycheck to paycheck and, in fact, have to take out an advance payday loan just to meet obligations. Interest rates on those kinds of loans averaged 370 percent APR. If you think that's ridiculous, you're not alone. The group Michiganders for Fair Lending wants to put a measure on the November ballot that would cap those loan rates to a comparatively low 36 percent. They're calling it the "Stop the Debt Trap" campaign. Our guest this morning is Josh Hovey, and he is a partner in the Lansing communications firm, Martin Waymire, and is working with Michiganders for Fair Lenders on this effort. And thank you so much for the time today.
Josh Hovey: So happy to be on the show. Thank you.
David Fair: Do we have any concrete numbers as to how many Michiganders have to utilize these kinds of loan services?
Josh Hovey: The state doesn't really track the exact number, but the Center for Responsible Lending has done a lot of research on this, and they know that roughly $100 million is taken out of the state economy every single year by these exorbitantly high interest rate loans. We also know that the average payday loan borrower immediately takes out another loan after repaying off their first one and get stuck in an average of 10 loans a year. So, this is a debt trap, and it's something that, by and large, most people would agree is completely unfair. It's preying on those who can least afford it. It's something that we need to stop.
David Fair: So, it's obviously a potential hazard for anyone on the lower income scale. Does it impact communities of color more severely?
Josh Hovey: Unfortunately, it does. When you look at where payday loan offices are located, they disproportionately locate in low income communities, communities of color, and, really, it's an issue of equity. It's an issue of fairness. And that's why we're going to the ballot this November and asking people to put an end to it.
David Fair: As we consider these loans, for those who are in the lending business, there's no way for them to lose. You can't really default on these loans, can you? [
Josh Hovey: No, you really can't. Because what happens is, imagine yourself, you know, living paycheck to paycheck, your furnace breaks down, or your car breaks down, and, you know, you think you have nowhere else to turn. You know, you're driving down the street. You see these businesses. So, the first place people think of is a payday loan. When there are other options out there, they're just not as well known. And what happens when other states have passed laws to cap the rates that these lenders charge them, more businesses, you know, banks, community credit unions, there's even nonprofits doing small dollar loans, more opportunities sprang up that don't drain so much money from people's pocketbooks and allow them to pay their bills in a regular way. Because what these payday lenders do is they gain access to your bank account. And, as soon as that bill is due, and they know that your paycheck is cashed and comes into your account, they immediately take the money that they're owed with hours left with anything else.
David Fair: And they have to borrow again.
Josh Hovey: Yeah, exactly. So, they don't get to pick and choose what bills they pay, what bills they pay late, things that sometimes people do when they're able to juggle their finances. But that doesn't happen on payday loans.
David Fair: So, these loan services will tell you that the high rates are because service banks and employers won't offer such services. And by offering these loans, even at those interest rates, they are helping people keep housed and fed. So, what do you say to them?
Josh Hovey: I say to them there's no reason to be preying on people who can least afford it. But I think anyone would agree that a three hundred and seventy percent interest rate is outrageous, predatory. And that's why we've built a growing coalition that includes base organizations, and it includes community groups. And they all agree that there are better options out there, and no one should be preying on the most vulnerable in our communities.
David Fair: This is 89 one WEMU. We're talking predatory lending and the effort to put a cap on payday loans by a ballot initiative with Josh Hovey, who is working with Michiganders for Fair Lending. There are a number of systemic issues that contribute to keeping people in these so-called debt trap. How prominently does predatory lending figure in the overall scheme of things?
Josh Hovey: Well, it's just one of many issues, but if we can take this one off the table, then we're making progress and making sure that people in our community are able to, you know, live life to their fullest potential. So that's why we need to do it. And other states have found a lot of success. There's 18 other states that have put caps on payday loans at a 36 percent APR. That includes a lot of purple states like Michigan. Nebraska, Colorado, South Dakota, Montana have all recently passed voter initiated laws to cap payday loans, and those laws passed in those states with more than 70 percent support. So, it shows you that this is a very popular issue. It shows you that when you look at those states, new lending opportunities have popped up, and this is a reform that's documented as working.
David Fair: Capping payday loans at 36 percent would certainly be a dramatic improvement, but, to me, still sounds very high. So, how is that figure determined?
Josh Hovey: Well, there is a rate that has been kind of used as a national model. The U.S. military found that there were a lot of payday lenders popping up around military bases preying on service members. And so, the federal government passed a law that capped the rate at 36 percent APR, which is similar to a high interest rate credit card. But that law, federally, only applies to active-duty service members. It doesn't apply to veterans. It doesn't apply to anybody else. And so, when that Military Lending Act was passed, it did a lot of good and helped make sure that our active military personnel weren't being preyed upon and that, you know, they were able to care for their families, which is the right thing to do. But now, we need to take that same national model and apply it to everyone else.
David Fair: In order to make the ballot, you need over 340,000 valid signatures in hand by the June 1st deadline. Where does that drive stand at this point?
Josh Hovey: Luckily, the weather is warming up, so we're able to get more people out there and on the streets, so we encourage people to look for petition signers. We are doing a paid signature question campaign where we're relying on people who they're getting income to go out and do this work for us. But it's tough out there. It's a tough job market, and so, we're always looking for more people to sign up. If you're interested in collecting signatures, we encourage you to go to our website. That's Fair Lending MI dot org. You can shoot us a message, and we'll connect you with a signature collection team, and you can feel good about doing some good work in your community.
David Fair: I know you're not counting on it, but should the petition drive fail, what comes next?
Josh Hovey: Well, we're going to keep on working on the Legislature. The whole reason we're doing this petition drive is because the Legislature has refused to address this issue for a number of years. So, if for some reason, we're not able to collect the signatures, our next best bet is to continue working on the Legislature. And, you know, we have an election coming up this year. We'll have some new members in the state Senate. And hopefully, if all things don't go well this year, then we'll keep at it in the Legislature next year.
David Fair: Josh, I really appreciate your time today. Thank you for sharing the information.
Josh Hovey: Thank you, David. I really appreciate it.
David Fair: That is Josh Hovey, partner with the Lansing based communications firm Martin Waymire, working with Michiganders for Fair Lending on a campaign to put an initiative on the November ballot that would cap payday loans to 36 percent. For more information and all the associated links you'll need, visit our website at WEMU dot org. I'm David Fair, and this is your community NPR Station, 89 one WEMU FM and HD One Ypsilanti.
Across Washtenaw County, 31 percent of households struggle to afford the basic necessities of housing, child care, food, health care and transportation. ALICE is an acronym for Asset Limited, Income Constrained, Employed — households that earn more than the Federal Poverty Level, but less than the basic cost of living for the county (the ALICE Threshold). While conditions improved for some households between 2010 and 2019, many continued to struggle, especially as wages failed to keep pace with the cost of household essentials (housing, child care, food, transportation, health care, and a basic smartphone plan). With this information, we know that payday loans can cause harm to individuals and families thereby increasing established debt. This is one the reasons why Financial stability is a focus for United Way of Washtenaw County.
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